Joined: 24 Dec 2006
|Posted: Tue Jan 30, 2007 10:51 am Post subject: Airlines’ maiden attempt at cartelisation grounded
|Atreyee Dev Roy
New Delhi, Jan 29 The maiden attempt by domestic carriers to form a cartel has hit an air pocket even before it could be put to a test flight. According to highly placed industry sources, the newly-formed Federation of Indian Airlines—comprising eight domestic airline companies—had in principle agreed at a recent meeting that full-service carriers like Jet, Kingfisher and Indian Airlines would not price their tickets lower than Rs 2.40 a mile. Low-cost airlines like Air Deccan, SpiceJet and Indigo would not price tickets lower than Rs 2 a mile.
While this will not have made a significant difference on short-haul sectors like Delhi-Bhopal, it would have resulted in a significant price difference of between Rs 700 and Rs 1,000 on long-distance flights like Delhi-Cochin.
The sources said many full-service carriers even changed their systems to ensure the floor prices, despite the fact that it gave considerable leeway to low-cost carriers. The move, they claimed, was to essentially bring some order to airfares and check the rampant use of gimmicks like tickets at throwaway prices.
The companies reached such an agreement twice, first to be executed in November 2006. The second attempt was made as late as the first week of January 2007. But the cartelisation broke both times, with low-fare carriers like SpiceJet, Indigo and Air Deccan demanding a free run at the last minute, the sources said.
When contacted, Siddhanta Sharma, CEO, SpiceJet, said specific figures for pricing were never discussed.
There were talks about bringing some rationality, but no concrete proposals were placed, he insisted. Air Deccan COO Warrick Brady said discussions on pricing were very generic.
Another FIA member said if ever such discussions took place, it had to be outside the formal agenda of the federation. “It had to be some other forum or some private meeting between one or two airlines,” he added.
Joined: 16 Dec 2006
Location: Bangalore, India
|Posted: Tue Jan 30, 2007 12:42 pm Post subject:
|Won't the MRTPC type of act apply here? More a question for the legal-eagles I guess (cue to Deaphen to pipe in here ......).
I would hate for a pricing cartel to be formed, it's kind of like going back to the old days of fixed prices from IC/9W/S2 - which we know was just price gouging.